New USPAP Q&As published March 6, 2025

[glenn walker]

So the USPAP experts determined
when a person claims that their 30 years experience does not equate to any expertice unless they can prove it mathematically ? But if they make no adjustment and another expert says he can prove an adjustment based on both his experiences in a certain market and using his $75 in a box regression model makes no adjustment become a factual error even if his adjustment results in little to no change in value. Seems like a gotcha to force apprasers to make adjustments out of fear of being told the other apprasers do.

 

[George Hatch]

As i see it, appraisers using the fannie style grid are quantifying adjustments and then ranking the subject in the range of adjusted value indicators. So they're always using both modes, not just one or the other.

 

[Tim Hicks (Texas)]

So-called "hybrids" are far from a new concept. The only thing new is their consideration (and now adoption) for the GSEs. I actually did desktops and hybrids (though they were not called "hybrids" then) when I was in the field. How I priced them then was no different than how I would price them today - analyze the time required, consider opportunity costs, and price accordingly. That is just business 101.

Service providers always wish they could charge more, and service users always hope to pay less. It is the market that sorts out where the balance point is.

So basically, you would not be doing them either because the offers to do them would not be worth your time.

 

[timd354]

You are better off specifying in the new forms quantitative adjustments rather than trying to argue that "adjustments" in the URAR cert = quantitative adjustments and has always meant quantitative adjustments. Adjustments in appraisals have ALWAYS been either quantitative or qualitative.

Are you one of the people working on the new forms?

Flacco, you clearly don't understand what the term "adjustment" actually means, try reading the definition I posted....whomever taught you that adjustments can be qualitative or quantitative was just flat out wrong and led you astray. Regarding the existing GSE forms, if the adjustments that need to be made are not quantitative, then why the heck do the GSE appraisal forms include a $ sign in the adjustment columns?

Regarding, the new forms, I have not worked at the GSEs since 2011 and have done no work on the new forms.

 

[timd354]

Adjustments in appraisals have ALWAYS been either quantitative or qualitative.

Nope, you are simply incorrect about that as you simply do not understand the definition of an adjustment to a comparable sale in an appraisal report. My position on the matter is supported by the definitions in The Dictionary of Real Estate Appraisal and the discussions on the topic in The Appraisal of Real Estate, both of which are generally accepted as credible references in our profession. If you have any support for your position from a credible source (other than Flacco says so) that is generally accepted among practitioners in our profession, please post it.

 

[timd354]

As i see it, appraisers using the fannie style grid are quantifying adjustments and then ranking the subject in the range of adjusted value indicators. So they're always using both modes, not just one or the other.

Yes, appraisers who use the Fannie forms are typically doing both some quantitative and some qualitative analysis, however the act of making an adjustment to a comparable sale is a quantitative action.

 

[Tom D]

Holl Sh*t Batman. If i wanted to make the 1004 so complicated and not doable in a reasonable sense, but only with rocket science. Then i would come out with more new stricter rules, and a new more complicated form. At which point, the lender looking at the time needed to get thru a 1004 will then say to fannie, give me an avm. No mas, no mas appraisers.

Just reading this thread, me wants to stop the pain in my head now. This business is becoming a slow pot of boiling water while we sit in it. Just finishing up 2 fix and flips. Hopefully, that's the my pain killer.

 

[sputnam]

The Appraising Residential Properties, 4th Edition, Appraisal Institute, "Other Quantitative Adjustment Techniques”, Page 344 further states: “…In instances where paired sales analysis is not conclusive, the appraiser may apply judgment to resolve the problem." The adjustments resulting from the appraiser's judgment is based on a study and understanding of historic or past buyer preferences. It further suggests that cost and depreciated cost data may be used with the appraiser arriving at the value contribution (not cost new) of certain features. The process of supporting the contribution of individual variables (features) is limited and often difficult to quantify, with adjustment deemed to be qualitatively supported unless otherwise addressed. All methods of supporting adjustments are usually limited by inherent uncertainties within the applications themselves.

Certainly correct. That is not license to simply not do appropriate analysis. It is in reconciliation... of an analysis, an approach, and/or the indications of value that judgement is applied.

 

[CGinMN]

Nope, you are simply incorrect about that as you simply do not understand the definition of an adjustment to a comparable sale in an appraisal report. My position on the matter is supported by the definitions in The Dictionary of Real Estate Appraisal and the discussions on the topic in The Appraisal of Real Estate, both of which are generally accepted as credible references in our profession. If you have any support for your position from a credible source (other than Flacco says so) that is generally accepted among practitioners in our profession, please post it.

Using = to denote that subject and comps have similar features is mathematically equivalent to stating the adjustment is $0. Using mathematical symbols in relation to a numeric benchmark imply a level of quantification as well. When you say a feature or combination of features results in a total value that is + or > $500,000, you are expressing a numerical relationship. It is not the same as saying red homes have higher values than blue homes, which is a qualitative statement. Same with ranking analysis without any numeric benchmark, that is qualitative.

In citing usage of the term “qualitative adjustment,” there are numerous examples here on the forum, in hundreds of thousands of appraisal reports, on quant guru George Dell’s website, in Ratterman’s Residential Property Appraisal (2020), and in Rothweiler’s Fall 2021 Appraisal Journal article which discusses strategies for quantifying qualitative analysis. The latter two, along with many other examples in the past decades, somehow got through AI’s 30+ MAI peer review committee. The mere fact that there is a dictionary entry for the term indicates that there is historical precedence for its usage. If you ask me, calling it a misnomer is ad hoc reasoning by word police because it is easier to rationalize “adjusting” the definition than to change the form. That is speculation, and I would change my mind on that if you can find a reference to “qualitative adjustment” being a misnomer that predates the 2005 edition of the URAR. I don’t have any old appraisal dictionaries to check this.

Regardless, professional usage of the phrase isn’t going to go away because they haven’t figured out a good phrase to replace it with. “A qualitative adjustment is applied to Comp 1” becomes “A qualitative comparison indicator is applied to Comp 1.” I’d say good luck changing the language, people seem to hate that.

 

[Tom D]

Very long ago in the state of Pa i had to be a real estate broker to be able to do appraisals. So at that time they must have thought that the qualitative experiences were very important.
The problem is that when i was a r.e. broker the buyer never bought the house exactly the way an appraisal thinks they do. It was all about the hot button. When you hit the hot button and the wife loved it. Well, there were no precise $ adjustments for items. So in effect, the 1004 is a hybrid between buyer's emotions and trying to prove adjustments. An avm takes out the emotions completely, and tries to do it by numbers. When avm is doing the majority of appraisals, we will see which is, in reality, is the better model to determine value. But most of us will not be coming back.